THE BLOG

Freedom of Choice?

21/04/2015 17:47 BST | Updated 21/06/2015 10:59 BST

As everyone knows, the budgets of local councils are being squeezed like never before. Recent analysis by the Institute for Fiscal Studies, looking at what has happened over the years of the coalition, showed that on one definition grants from central government to local government have been cut by almost 37% per person in real terms between 2009-10 and 2014-15.

Last month's Budget suggested that George Osborne has softened on the overall spending squeeze by the end of the next Parliament, but he still indicated more cuts for local government over the next few years. And things would be unlikely to be significantly easier should the General Election lead to a government of a different colour.

Surviving all this is very hard for councils. There is a limit to how many things can be cut 'a little' and policies shaved 'a bit' in ways that add up to the aggregate savings needed. One way forward is to see if councils can work better with their local voluntary and community sector. But this cannot just be by them pitching in with lower bids for contracts because they have lots of 'free' volunteers or bring voluntary income to the party. This is neither right nor is it sustainable.

Instead, councils need to talk to their local voluntary and community sector to think about exactly what services are most needed; how they can reduce demand for services, not just meet it; how they can embrace the capability and capacities of communities and individuals; and how they can work with their local voluntary sector to move forward on this agenda.

One major obstacle to this has always been procurement rules and practices. Public sector procurement is often dominated by a risk-averse attitude - officers living in fear of not playing fair with bidders, of being accused of favouring one group over another, and ultimately of being legally challenged. To avoid these dangers they become intensely rule and process-based.

Commissioners may have imagination but by the time their ideas hit procurement, contracts are drawn up without much consultation with those who know have real insight into community needs. They are then duly put out to the market in a way that can't be amended, and usually the lowest bidder wins.

This is no way to run a railway, let alone a complex, place-making organisation that is a local council.

But it need not be like that. The Social Value Act was brought in partly to help councils and other government commissioners go beyond this. It has not, however, worked that well to change behaviour. The recent review of the Act embraced one of the ideas we at NPC put forward, which is to create a framework as to how social impact can be measured, so that commissioners have more confidence to make decisions on that basis and not just on price.

In fact there has always been more space to innovate than many procurement professionals have let on: much of the blame for the way they do things has been put on EU procurement laws, but that has always been a bit misleading and recent changes make it even less on.

The Government recently introduced the Public Contracts Regulations 2015 to implement the new EU Directive and NPC has produced a paper with Linklater's, Reforming the relationship, showing commissioners how it makes it a bit easier for them to work with their voluntary sector.

Here are three examples. First, there is now clearly more room for pre-procurement dialogue. In other words, allowing purchasers to have preliminary market consultations - including with potential providers - to ensure they really know their markets.

Second, new procedures of 'competitive dialogue with negotiation' and 'innovation partnership procedures' are introduced. Both potentially allow more flexibility.

Third, the new regime encourages purchasers to divide contracts into smaller 'lots' which would help charities and social enterprises as well as SMEs more generally.

None of these are compulsory. Indeed some would say that you could do these things under the old rules to some degree. And in all cases, principles of non-discrimination and transparency will need to continue to be followed.

But they do give more options for local commissioners and procurement officers to take more risks and work much more closely with the voluntary and community sector. Now, let's see what they are made of.